GoDaddy to buy Host Europe for $1.82 billion

(Reuters) - GoDaddy Inc (GDDY.N), a U.S.-based website domain name provider, said on Tuesday it would buy peer Host Europe Group (HEG) for 1.69 billion euros ($1.82 billion), including debt, as it seeks to expand beyond the initial set-up of websites.

The GoDaddy inc. logo is shown on a computer screen in this illustration photo in Encinitas, California May 3, 2016. REUTERS/Mike Blake

GoDaddy has branched into the more profitable business of hosting websites for small businesses and consumers and the HEG deal will help it accelerate this shift as well as broaden its customer base in Europe.

The deal gives the company a five-year jump in Europe, GoDaddy Chief Executive Blake Irving said in an interview.

Godaddy’s share price rose 2.2 percent in early trading.

HEG is one of Europe’s largest independent web hosting firms and operates brands such as 123Reg, Domain Factory, Heart Internet and Host Europe.

GoDaddy, well-known in the United States for its at times provocative TV marketing campaigns, trumped bids from German Internet service provider United Internet AG (UTDI.DE) and Deutsche Telekom AG (DTEGn.DE) for the company.

Reuters had reported last month that GoDaddy was in exclusive talks to buy the company.

HEG is currently owned by European private equity firm Cinven Ltd [CINV.UL], which acquired the business in August 2013 for 438 million pounds ($560 million).

Irving said the company had considered buying HEG in 2013, but dropped the plan over integration concerns.

GoDaddy also said it would explore options for HEG’s PlusServer managed hosting business, including a possible sale.

HEG’s chief executive, Patrick Pulvermuller, will lead European operations of the combined company.

The HEG platform will likely be used by Godaddy for follow-on deals in Europe, a person familiar with the deal said.

GoDaddy said HEG was on track to generate about $328 million in bookings and about $139 million in adjusted EBITDA in 2016.

Cinven was advised by Deutsche Bank on the deal, while Godaddy was advised by Greenhill.

Banks including Barclays, Citigroup, Deutsche Bank and RBC are lining up the financing of the deal.

($1 = 0.9284 euros)

($1 = 0.7849 pounds)

Reporting by Narottam Medhora in Bengaluru; Editing by Savio D'Souza and David Evans